Secret deal would give Shell a big corporate welfare check

Daily News Editorial

Posted: June 07, 2012

IT’S WELL-KNOWN to most by now that Gov. Corbett doesn’t much like welfare programs. His recent initiative to deny food stamps to anyone with assets exceeding $5,500, the banishment of about 90,000 kids from the Medicaid rolls, and the elimination of cash-assistance grants for the disabled and others are among recent moves that makes his position clear.

There is an exception to his aversion to welfare, though: If you’re a corporation, you can get plenty of state aid, and you won’t be subjected to any kind of means test. That’s the only explanation we can figure for his recent proposal to give almost $2 billion in tax breaks over the next 25 years to the second-richest company in the world, Royal Dutch Shell.

Shell wants to open a "cracker" plant, which would harvest ethane from fracking operations in Marcellus shale to create plastics. Shell already got approval to create a Keystone Opportunity Zone, which means it is paying no income or property taxes, and has some relief on sales taxes. But this largesse wasn’t enough: Corbett has designed an under-the-radar tax break amounting to $67 million a year. You can guess what magic word being used to justify this: jobs. Official estimates promise 7,000 direct hires and 20,000 "indirect" jobs.

Put aside the fact that similar plants suggest that 400 jobs is a more realistic number. This impulse to "do anything for a job" is not only short-sighted, but it borders on magical thinking. Is Shell required to provide high-paying jobs with benefits, or low-wage jobs? Will the new jobs be truly new, or transferred from other locations? The state Department of Community and Economic Development doesn’t have that information because the deal has not been finalized. But when the deal is done, it will be too late.

Why is such secret dealing with our money allowed to happen?

This deal brings to mind a similar corporate welfare outrage: Kvaerner. In 1997, the state gave the shipbuilder $400 million in subsidies in exchange for the promise of thousands of jobs. Soon after, Kvaerner announced it was closing all its shipbuilding operations. The company became Aker, and by 2011 it said it needed another $42 million in public money to stay in business. At that point, it employed 400.

Every state has a range of corporate-tax subsidies, but a recent report by the accountability research group Good Jobs First underscores that not all these subsidies pay off. And Pennsylvania’s track record is less than stellar.

Good Jobs First analyzed the details of tax-break and credit programs, enterprise zones and other state assistance and assigned each state on how effective and accountable such programs are. Pennsylvania got a "D."

Corbett campaigns on reducing the size and cost of government. Why doesn’t that apply to government giving a big welfare check to a well-heeled company like Shell? This is particularly painful at a time when social programs for people are slashed and demonized. And against the backdrop of the Supreme Court’s "Citizens United" ruling, which granted free-speech rights to corporations, we fear what we are witnessing is the decline of the primacy of the citizen in favor of the corporation. As small-government types like to say, our Founding Fathers would be spinning in their graves. n